Kraken: Everything to Know

By  Beluga Research July 22, 2023

Image for Kraken: Everything to Know

Summary

  • Kraken is a crypto exchange that provides a platform for users to trade cryptocurrencies, including bitcoin (BTC), ether (ETH), XRP (XRP) and Cardano (ADA) among others
  • Founded in 2011 Kraken is one of the oldest cryptocurrency exchanges in the industry
  • Kraken is a U.S.-based global crypto exchange

Overview

Kraken is a crypto exchange that provides a platform for users to trade various cryptocurrencies, including bitcoin (BTC), ether (ETH), XRP (XRP) and many others. While based in the United States, the exchange operates globally, serving customers from over 190 countries.

Kraken's offering is diverse, as it provides an opportunity for investors to choose from more than 100 cryptocurrencies and a wide selection of trading pairs including cash to crypto, crypto to crypto and cash to cash pairings. Accepted fiat currencies include, but are not limited to the US Dollar (USD), Euro (EUR), Canadian Dollar (CAD) and Japanese Yen (JPY).

A Brief History

Bitcoin enthusiast Jesse Powell co-founded Kraken to fulfill the world's need for a platform capable of facilitating crypto trading. Launched in 2011 in San Francisco, Kraken has since expanded its operations globally and exists today as one of the longest standing, most reputable crypto exchanges.

Getting Started

To use Kraken, users must first create an account by providing basic personal information such as a name, email address and password. From there users can proceed with the verification process, which may require submitting additional identification documents to comply with "Know Your Customer" (KYC) and "Anti-Money Laundering" (AML) regulations.

After an account is verified, users can fund a Kraken account by depositing fiat currency or cryptocurrencies. Kraken supports multiple fiat currencies including USD, EUR, CAD, JPY, and GBP, allowing users from different regions to easily trade on the platform. Traders can make fiat deposits by connecting their bank accounts or through other supported payment methods, while cryptocurrency deposits can be made by transferring digital assets from external wallets.

As soon as an account shows available funds, users can explore the trading features Kraken offers. The platform provides various types of orders including market orders, limit orders and stop orders, giving users flexibility in executing trades. For more experienced users interested in advanced trading strategies, Kraken offers margin trading and futures trading.

Unique Aspects

One of the unique aspects of Kraken is its commitment to security. Kraken stores the majority of user funds in offline, air-gapped cold wallets, which are not connected to the internet and re therefor less susceptible to hacking attempts. Additionally, Kraken employs two-factor authentication (2FA) and encryption techniques to enhance the security of user accounts.

Of note, the platform provides a comprehensive Help Center that offers users access to detailed articles and guides meant to help them navigate the platform and resolve common issues. Additionally Kraken offers customer support via email and live chat, ensuring that users can ask questions or get help troubleshooting an issue.

Furthermore, Kraken is known for its commitment to regulatory compliance. The exchange has actively worked with regulatory authorities to ensure that it operates within legal frameworks. By adhering to KYC and AML regulations, Kraken aims to create a transparent and trustworthy environment for its users.

Advantages

  • Security. Kraken stores the majority of customer deposits in offline, air-gapped cold wallets, which are resistant to hacking attempts. Additionally, Kraken employs advanced encryption techniques and two-factor authentication (2FA) to ensure that user accounts remain secure.
  • Liquidity. Kraken offers high liquidity, meaning there is a large volume of buyers and sellers on the platform. This ensures users can easily execute trades at competitive prices, without experiencing significant price slippage. The platform also supports margin trading, allowing users to trade with borrowed funds, further enhancing liquidity.
  • Wide Range of Cryptocurrencies. Kraken supports a wide range of cryptocurrencies, including bitcoin (BTC), ether (ETH) and LTC (litecoin) as well as an array of altcoins like XRP (XRP). This extensive selection allows users to access various investment opportunities and diversify portfolios.
  • Advanced Trading Options. Kraken provides advanced trading features for experienced traders. These include stop-loss and take-profit orders, as well as margin trading with adjustable leverage. The platform also offers advanced charting tools, real-time market data and trading Application Programming Interfaces (APIs), empowering users to implement sophisticated trading strategies.
  • Regulatory Compliance. Kraken operates in compliance with applicable regulations of the jurisdictions in which it serves. This commitment to regulatory compliance helps build trust among users and ensures the platform's long-term sustainability. By adhering to legal requirements, Kraken provides a more secure and reliable environment for users to trade cryptocurrencies.

Disadvantages

  • User Interface Complexity. While Kraken offers advanced trading features, some users may find the platform's interface complex and overwhelming, especially if they are new to cryptocurrency trading. The abundance of options and technical indicators can be daunting for beginners, requiring a learning curve to navigate the platform effectively.
  • Limited Payment Options. Kraken has fewer payment options compared to some other exchanges. While it supports bank transfers and cryptocurrency deposits, it may not offer as many fiat deposit options or support for popular payment methods like credit cards. This limitation could inconvenience users who prefer alternative payment methods.
  • Customer Support Response Time. At times, Kraken's customer support response time may be slower compared to user expectations. Due to the high volume of inquiries and support tickets, it can take longer to receive a response or resolve an issue. This delay may cause frustration for users requiring immediate assistance.
  • Restricted Availability in Some Regions. While Kraken is a global exchange, its services are not available in all countries, so individuals in the restricted jurisdictions will not be able to access the platform.
  • Potential Market Manipulation. As with any exchange, there is a risk of market manipulation on Kraken. Although the platform takes measures to detect and prevent such activities, it is impossible to eliminate them entirely. Traders should exercise caution and stay informed about potential market manipulation techniques to make informed trading decisions.